It is irrelevant, legally, that one implementation of a streaming software may choose to download the streamed data to a temporary disc file, or that some content downloaders can structure the assembly of a partially downloaded file so that (some) content can be accessed before the download is fully completed. What matters is that a streamed file is intended to be consumed contemporaneously with the acquisition of the downloaded data however it is stored on the computer, and that caching for efficiency aside, each separate act of consumption involves a separate act of acquiring the content, whereas a downloaded file is intended to be downloaded once and consumed multiple times.

Also how is the betamax case not applicable. The user of a VCR isn't "licensed" to record whats on their tv

No, they are not licensed to record what's on TV. But the point of the Betamax case was that "time-shifted viewing" by a private viewer was deemed to be fair use because at the time broadcast TV content was transmitted on a fixed schedule and absent the private recording, was not otherwise consumable because many of these shows were not rerun or sold on cassette tape. Thus the court found that the Betamax had substantial non-infringing use (and indeed, that it's primary intended use was thus non-infringing).

However, digital content is provided on demand so there is no need for "time-shifted" viewing, and so the reasoning from Betamax no longer applies. Moreover, many content owners now make the content available for "connectivity-shifted" viewing (aka, away from internet connectivity) via a downloaded content license. Thus, downloading that content from a streaming source is generally no longer protected by fair use.

Consequently, using youtube-dl to download your favorite streamer to watch on a plane trip would probably be fair use because they probably don't make the content available for access-shifted viewing otherwise. But using it to download a music video would not, because the music and video owners make those available for download with a purchasable license. And the problem with youtube-dl is that they demonstrated that the primary intent of the tool was to download music videos, the evidence being that the README and parts of the code explicitly refer to downloading music videos subject to RIAA licensing. Under the Betamax ruling, this would be fine, because there are substantial legitimate uses...but the DMCA changed that and so it doesn't matter if there are substantial legitimate uses if the primary intended use was to violate copyright.

It beggars belief that people can be this stupid. Why the hell would one mention it here? Are they truly that stupid to believe that the RIAA wouldn't see it? Then they made matters even worste by putting it on Github instead of some obscure website in Eastern Europe?

Talk about shooting oneself in the foot!